JSE-listed clothing and homeware retail giant Mr Price Group is a step closer to scooping online retail kitchenware pioneer Yuppiechef, after the Competition Commission of South Africa (CCSA) on Thursday announced its backing of the acquisition.
The CCSA said in a statement that it “has recommended that the Competition Tribunal approve the proposed transaction” without conditions.
“The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The commission further found that the proposed transaction does not raise any public interest concerns,” it added.
Durban-headquartered Mr Price first announced the surprise all-cash offer for Cape Town-based Yuppiechef in mid-March. The deal is valued at around R500 million.
The CCSA noted in its statement that while Mr Price is an “omni-channel” retail business, it “sells a small percentage of its products through online sales channels [online stores, the MRP app and Facebook]”.
“Various Mr Price stores serve a diverse range of customers across all Living Standards Measurement [LSM] categories. Of importance to the proposed transaction are the activities of Mr Price Group in relation to Mr Price Home and Sheet Street,” said the commission.
“Mr Price Home is a mass market homeware retailer that sells a range of contemporary homeware and furniture. Mr Price Home has 183 stores in South Africa. Sheet Street is a homeware store offering a wide range of core and fashion products across the bedroom, living room and bathroom segments. Sheet Street has 322 stores in South Africa,” it added.
Yuppiechef is a South African retailer, focused on the supply of kitchen and homeware, furniture, and appliances, mainly via its website, the commission said.
“Yuppiechef operates seven “brick and mortar” stores, as well as a wholesale division, which develops, and imports branded goods, primarily kitchenware, for wholesale distribution to retail customers in South Africa,” it pointed out.
A privately-owned business, Yuppiechef was co-founded by Andrew Smith and Shane Dryden back in 2006.
In recent years, the company began opening stores at shopping centres as part of a move to transform into an omni-channel retail business.
The Mr Price acquisition will see the founders remain involved, however the JSE-listed group has hinted at extending the Yuppiechef store network beyond its current Western Cape and Gauteng presence.
Yuppiechef will also boost Mr Price’s online retail expansion against the likes of TFG’s upper market @home chain and pure-play online retailer Takealot.com.
“The purchase consideration, which represents approximately 1% of market capitalisation, will be settled in cash,” Mr Price said in March.
“The targeted effective date is subject to the fulfilment of both regulatory and commercial suspensive conditions which includes competition authority approval,” the group added.